The history of microfinance in Nepal is relatively new and the government's
attempt to promote microfinance services dates back to 1975. It
was recognized as an official poverty alleviation program only
in the country’s sixth plan (1980/81-1984/85). It however gained
momentum after the restoration of democracy in 1991.
Microfinance is often seen as an effective strategy for extending financial
services to the poor and other disadvantaged groups not reached
by the formal finance sector. Despite its tremendous potential
to alleviate human poverty, only 33% of households below the
poverty line have access to it. There is even a greater need to
expand microfinance services in the high hills and mountains.
Nepal has a wide range of active
microfinance institutions that provide financial services to the
poor in their own way. These institutions are regulated by
government acts such as:
The Bank and Financial Institution Ordinance
The Cooperative Act (1991)
The Financial Intermediary Act (1998)
Within the available legal and regulatory framework and actively involved in
the microfinance sector are:
Four Microfinance Development Banks
Five Grameen Bikas Banks
Over 1800 Savings and Credit Cooperatives
Over 200 Small Farmers Cooperatives
Over 44 Financial Intermediary NGOs
Three categories of second tier refinance institutions have been established
to provide wholesale loans to different MFIs in Nepal such as:
The Rural Self-Reliance Fund
The Rural Microfinance Development Center
The Sana Kisan Bikas Bank (Small Farmers
INAFI Nepal has been established
as a network organization of microfinance practitioners and
promoters to strengthen the microfinance sector in Nepal.
INAFI Nepal Member Organizations:
At present, the following are the member organization of INAFI Nepal:
Partnership-Nepal (SAP-Nepal), Kathmandu.
Nirdhan Utthan Bank
Ltd. (NUBL), Bhairahawa
Society Ltd (WCS), Kathmandu
Center for Self-Help
Development (CSD-Nepal), Kathmandu
Society of Local
Volunteers' Effort (SOLVE-Nepal), Dhankuta
Bank Ltd. (SB Bank), Janakpur
Centre-Nepal (DEC-Nepal), Chitwan
Major action INAFI Nepal
One of the major interventions of INAFI is Capacity building, which has
been used to enhance the managerial capacity of its member
organizations. With this intervention member organizations were
expected to be better able to plan and manage their growth,
manage operational and credit risks, track and monitor the
impact of their services on poverty, attract and retain clients
and adopt regional standards and benchmarks in managing their
growth. Another intervention of INAFI is research and
documentation of issue-based case studies and the
dissemination of the findings to the stakeholders of micro
finance. Advocacy and Communication is also another main
activity of INAFI Nepal. INAFI Nepal is facilitating and
organizing round table discussions, dialogues and workshops in
order to lobby and advocate policy changes in microfinance
institutions. Since member organizations of INAFI may need to
improve their delivery of services to the community, member
service has become an important intervention to formulate a
standard policy to change present practices. Product
development is another intervention that intends to make
member organizations able to design/develop appropriate
financial products and services that attract more women and poor
Sustainability of microfinance
Microfinance means building
financial systems that serve the poor. Microfinance services are
possible only when microfinance institutions manage their
activities in a sustainable way. Sustainability is necessary to
reach a significant number of the poor people. Building
sustainable financial systems for the poor means building sound
domestic financial intermediaries that can provide financial
services to poor people on a permanent basis. The financial
sustainability of microfinance programs is not only necessary in
order to reach a large number of poor clients but it has also
been recognized as an integral part of the financial sector and
INAFI Nepal's activities towards
sustainability focus on:
Highlight the importance of
self-sustainability of the microfinance program.
Enhance the managerial
capacity of microfinance institutions to achieve
self-sustainability with quality outreach
Share and discuss different
ways for operational and financial self-sustainability of
the MF program
Knowledge on the basic principles
of microfinance is necessary to increase public awareness and an
understanding of microfinance. It has been realized that the
MFIs and other stakeholders should understand various dimensions
of micro finance and to improve their delivery systems. INAFI
Nepal assists to strengthen the capacity of Microfinance
institutions through need based training package.
INAFI Nepal's training towards
capacity building focus on the following:
Internalize the basic
concepts/principles, issues, raise awareness, and develop
various methodologies to provide efficient client friendly
microfinance services to the poor.
Plan to enhance the inclusion
of disadvantaged group including women in their program.
Operational and financial
management of MFIs.
Suitable business plan for
Thematic research study
INAFI Nepal conducted research on
thematic issues. Research findings shared with member
organizations, MFIs and the other stakeholders including policy
makers and government agencies.
Conducted research on 'Impact
of microfinance services on Poverty Reduction in Nepal'
Conducted research on
'Microfinance Services in Insurgency and Conflict Situation:
A Case Study of Nepal'
Dissemination of the research
Documentation and publication
of the research report.
Mainstreaming Gender in
Women in Nepal are often deprived because of mainly social and legal
discrimination. Gender equality is increasingly becoming the
focus of government and citizen concern and a pertinent
challenge for the microfinance sector around the globe. A Gender
perspective in microfinance is necessary for the positive
evolution of human development, which is more than just a
strategy for economic development. Emphasizing the importance of
a gender perspective for the success of microfinance sector,
INAFI Nepal seeks to conceptualize the gender problem in Nepal.
INAFI also aims to provide responses and strategies for
mainstreaming gender both at the client and institutional level
and to reinforce gender equality as a central concern.
INAFI Nepal's activities towards
gender and microfinance focus on:
conceptualisation and strategy for gender mainstreaming in
micro finance programs.
Identify key issues on gender
mainstreaming in microfinance.
policy recommendations to mainstream gender in microfinance.
Address of INAFI Nepal:
GPO 3827 SAP Falcha, Babarmahal,
Phone: +977-1-4223230, 4223050